Debt collection

Many creditors refer bad debts to a debt-collection agency. Creditors can also ‘sell’ debts to collection agencies. When this happens, the debt collection agency becomes the creditor.

Debt collection and the law

Debt collectors must obey the law when recovering debts. This means they must not:

• use physical force or intimidation towards you, any member of your family or anyone associated with you
• harass you (see below)
• mislead or deceive you (or try to do so) – for example, sending letters that look like court documents
• take unfair advantage of any vulnerability, disability or other similar circumstance affecting you. This is called ‘unconscionable behaviour’.

Harassment

You do not have to accept harassment from creditors or debt collectors. Get help immediately.

The worst tactics include:

• phone calls, day and night, at work and home
• calls to your employer, revealing details you might consider private
• calls to family members, often suggesting that someone not responsible for the debt should pay it
• intimidation and threats
• misleading and untrue statements about what might happen to you if you do not pay
• refusing to leave when asked.

Write down what is said to you, the name of the person, date and time. Explain that this contact is not acceptable and that any further communication must be in writing. Follow this up with a letter and keep a copy.

You do not have to let a debt collector into your home. If you do agree to let them in, they must leave if you ask them to. Generally, visits to your home or workplace should only be made if there is no other way for the debt collector to contact you or if you have asked for or agreed to a visit.

Complaints about debt collectors

If you think a debt collector is harassing you or has disobeyed the law, make your complaint clear to them and also to the person in the debt collection agency who is in charge of complaints, if there is one. If possible, make your complaint in writing. If this does not resolve the matter, you can make a formal complaint about their behaviour.

Consumer Affairs Victoria (CAV) is responsible for complaints about debt collectors in Victoria. Call the Consumer Affairs Helpline on 1800 55 81 81 or see the CAV website (link below) to submit a complaint online.

The Australian Competition and Consumer Commission (ACCC) and Australian Securities and Investment Commission (ASIC) are jointly responsible for Commonwealth laws that protect people from harassment and other illegal debt collection conduct. ASIC deals with misconduct when the debt is with a financial service. ACCC is responsible for all other matters. See the ACCC website (link below) for more information.

More information

Getting help with financial problems

Related publications

Debt problems: the law, your options

Weighing it up

Related websites

Australian Competition and Consumer Commission – Dealing with debt collectors

Consumer Affairs Victoria – Resolve a dispute 

How we can help

Call Victoria Legal Aid’s (VLA) Legal Information Service for free information over the phone about the law and how we can help you with your legal problem. You can speak to a legal information officer in English or ask for an interpreter. Phone (03) 9269 0120 or 1800 677 402 (country callers), Monday to Friday from 8.45 am to 5.15 pm.
VLA’s other free legal services include:

• advice at VLA offices and other locations across Victoria
• lawyers who are on ‘duty’ to help at many courts and tribunals.

For some matters we can provide you with a lawyer to help you run your case.

To find out more about any of our legal services see What we do.

Who else can help?

See Getting help with financial problems for details of free financial counselling services in your area and other organisations that can help you.